A childcare voucher (cheque infância, also known as a nursery voucher or childcare benefit voucher) is an employee benefit that employers may offer to help employees with children of pre-school age.

The purpose of this benefit is to support families by helping cover the cost of quality childcare, reducing the financial burden associated with early childhood education.

In this article, we explain the eligibility requirements, how the benefit works, and the tax advantages associated with it.

Childcare Voucher: what is it and who can receive it?

This benefit is a form of financial support voluntarily provided by employers to their employees.

It is important to note that employers are not legally required to offer this benefit. It is entirely optional and depends on each company’s employee benefits policy.

The main purpose of the voucher is to help families pay the fees charged by private nurseries and pre-school childcare facilities.

By easing these costs, parents can work with greater peace of mind, knowing their children are being cared for in a safe and appropriate environment.

How is this Benefit Paid?

Companies that offer childcare vouchers may do so in different ways.

Some employers provide a fixed monthly amount that employees can use to pay nursery or childcare fees at the provider of their choice.

Others establish agreements with private childcare providers, allowing employees to benefit from discounted nursery fees instead.

Employees should check their company’s internal policies to understand the eligibility criteria and the rules governing the use of the benefit.

Many organizations have adopted childcare vouchers as part of their employee benefits package, helping to attract, retain and reward talented professionals.

In Portugal, childcare vouchers are generally intended for children up to seven years of age who attend pre-school education.

Older children and young people, generally between the ages of 7 and 25, may also benefit from similar support. In these cases, the benefit is usually provided in the form of an education voucher (cheque educação).

For many families, this support represents a significant reduction in monthly childcare expenses, helping to free up household income for other essential needs.

Are Childcare Vouchers Taxable?

One of the main advantages of childcare vouchers is their favorable tax treatment, both for employees and employers.

When provided in the form of childcare vouchers, the benefit is generally exempt from Personal Income Tax (IRS) and Social Security contributions.

This means that:

• no IRS withholding tax is applied; 
• the value of the voucher does not need to be included in the employee’s annual IRS tax return; and 
• the employee is not subject to the standard 11% Social Security contribution on the benefit. 

However, the same tax treatment does not apply if the employer chooses to provide the benefit as a cash payment instead of issuing childcare vouchers.

In that case, the amount paid is treated as regular employment income and is therefore subject to the applicable IRS withholding tax as well as the employee’s 11% Social Security contribution.

Tax Benefits for Employers

For employers, childcare vouchers may also provide important tax advantages.

The amounts paid may generally be treated as staff costs for corporate tax purposes, allowing companies to benefit from:

• a 40% tax uplift (majoration) when calculating deductible personnel expenses for Corporate Income Tax (IRC); and 
• exemption from Social Security contributions (TSU) on the amounts granted. 

However, to qualify for these tax benefits, employers must not make the benefit conditional on criteria such as seniority, productivity, performance, or similar employment-related requirements.

If such conditions are imposed, the childcare voucher may be reclassified as ordinary remuneration rather than an employee welfare benefit, meaning the associated tax advantages may no longer apply.

If you are considering offering childcare vouchers to your employees but are unsure about the applicable rules, it is advisable to consult your certified accountant, who can help ensure the benefit is implemented correctly and in accordance with Portuguese tax legislation.